THE CREDIT crunch has left a council with a multi-million pound hole in its recycling budget.

Falkirk Council had hoped to sell the area’s recyclable bottles and paper to Re-Gen Waste Ltd for £17.50 a tonne.

But only five days after signing a contract to process 12,000 tonnes a year, the company—based in County Down, Northern Ireland—has pulled out, citing the collapse of the recycled paper market.

In an emergency measure the council will be forced to pay another company £40 per tonne to remove their waste.

Re-Gen bosses told the council they would be unable to fulfil the terms of the contract because of market turbulence.

The market collapsed because China, the main recipient of UK recycled paper, was no longer buying great quantities.

The council have agreed a three-month temporary contract with Oran Ltd, who previously held the contract. Oran had been receiving £28.61 per tonne under their old contract.

This will cost the council £108,000 over the short-term contract, rather than creating a profit of £47,250 from the Re-Gen contract.

The council would have made £1,050,000 over the five years had the Re-Gen contract gone ahead.

A spokeswoman for Falkirk council said, “We hope to go out to tender after our three month contract is up.”

But if it cannot be renegotiated the council could face a multi-million pound bill over the term of the now cancelled five-year contract.

Robin Baird, Falkirk’s waste strategy co-ordinator, insisted sending the waste to landfill was not an option.

He said, “The price of sending waste to landfill is set to go up to £48 per tonne, making it a more expensive option than paying to have it processed.

“What we have to remember is that every council in Scotland is committed to recycling and becoming more sustainable in general.”

“In the short-term, the material that we are recycling is a limited resource. For example plastic bottles are oil-based. This is a commodity which is finite.

“The paper markets have crashed before but the emphasis is going to be about making the best of what we’ve got.”

In Falkirk, much of the area’s unwanted paper ends up in Holland, while aluminium from cans is re-used in Britain.

Mr Baird added, “We look at recycling as a resource, not waste.

“I’m not worried that we will be left with the resource. Perhaps in the short-term it may cost us to process this but it will become valuable again in the longer-term.”

Councillor David Alexander, SNP group leader, said, “It will cost council taxpayers a fortune yet wasn’t debated in public. The contract was awarded in public and should be scrutinised in public.”

Council leader Councillor Linda Gow said, “The bottom has dropped out of the market and we have been left to pick up the pieces.”

Falkirk Council are considering legal action over the cancellation.

Re Gen Waste Ltd declined to comment on the issue.